Financial responsibilities if you rent out a property

You may be a professional buy-to-let landlord, or you may rent out your home as an ‘accidental landlord’ because you need to move out of your home, to trade up or rent somewhere larger. Whatever your situation, make sure you’re aware of your financial responsibilities. We also offer links to more information on your legal responsibilities.

Tax implications

As a landlord you need to know your Income Tax and Capital Gains Tax liabilities. Here we offer an overview with links out to more detailed information.

Income Tax

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From April 2017, individuals who rent their properties online, through websites such as Airbnb, will not have to pay any tax on the first £1,000 they make through this service.

Rental income is added to any other income you earn during the year – for example, from employment or savings – to calculate your tax liability. You must declare this income on a Self Assessment tax return each year.

However, you can claim certain expenses to offset against your rental income and reduce your tax bill. This includes, for example, mortgage interest payments, if you have a buy-to-let mortgage, letting agent fees and maintenance costs. For the full detail follow the link below.

Buy-to-let landlords can offset their mortgage interest payments and some of their costs against their income. From April 2017 the higher and additional rates of relief will be phased out and restricted to 20% for all landlords by April 2020.

Capital Gains Tax

If you are selling a property that isn’t your main home – including a rental property – it’s likely that you will have to pay Capital Gains Tax on any gain (profit).

You can offset expenses of a capital nature such as replacement windows against capital gains when the property is sold. As this may be many years later it is important that you keep records and evidence of any such expenditure. Then when you come to sell check with a financial adviser or accountant what you can claim back.